Questionable Club Hiring Practices

by Micke Rind, Capital District Risk Manager

KI's General Liability insurance covers all members of the Kiwanis Family, as well as "volunteers" working on a service project under the direction of a Kiwanis Club. But occasionally, Kiwanis Clubs may need help with some of the "heavy lifting" on a major project. For instance, a club may want to help a disabled member of their community by clearing out accumulated debris or by building a ramp to facilitate access to their home. To complete such a project, some clubs may have "hired" day laborers by paying them cash "under the table". Any clubs engaging in such a practice might also fail to maintain adequate records of the individuals' names and addresses, overlook the need to file W2s and provide unemployment and workers' compensation coverage, or even neglect to withhold Social Security and Medicare taxes,

To answer the easy question first, because such individuals are being paid, they are not "volunteers", and are not covered by KI insurance. Beyond that, these clubs' actions could create serious legal and tax problems for Kiwanis. Just one such problem is that, as employees, they would not be covered for personal injury would be without workers' compensation. If they then injured themselves, the club could be subjected to a lawsuit and not have any coverage for it.

Fortunately, there is a straightforward way around this problem. There are legitimate day-labor provider companies which can supply properly screened workers, while at the same time meeting all legal and tax requirements. The relatively minor cost of using such organizations to ensure these workers are properly vetted and state and federal legal requiements are met is small by comparison with the legal liability to which such clubs and the District and KI might be subjected if any clubs engage in such a practice.

If you have any questions on this or other risk management issues, please contact Mike Rind, Capital District Risk Manager, at 410 294 9423 or mrind@comcast.net.